Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. p 14 - 2 on january 1, 2018, baddour inc., issued

P 14 - 2 On January 1, 2018, Baddour Inc., issued 10% bonds with a face amount...

Free

90.2K

Verified Solution

Question

Accounting

P 14 - 2

On January 1, 2018, Baddour Inc., issued 10% bonds with a faceamount of $160 million. The bonds were priced at $140 million toyield 12%. Interest is paid semiannually on June 30 and December31. Baddour's fiscal year ends September 30.

Question #1.) What amount(s) related to the bonds would Baddourreport in its balance sheet at September 30, 2018?

On 9/30/18 Interest expense - Interest payable is $4,212,000 -$4,000,000 = $212,000,000. I'm curious then, when subtracting theinterest payable from the interest expense what it would be on6/30/18? This is the 9th edition of Intermediate Accounting byauthors Spiceland, Nelson, and Thomas. Published by McgrawHill.

Answer & Explanation Solved by verified expert
4.4 Ratings (609 Votes)

1] Discount on bonds payable [on the date of issue] = 160000000-140000000 = $      2,00,00,000
2] Interest expense to be accounted on June 30, 2018 = 140000000*6% = $          84,00,000
Interest payable = 160000000*5% = $          80,00,000
Amortization of discount = 9600000-8000000 = $            4,00,000
Balance in discount account $      1,96,00,000
Carrying value of bonds as on June 30, 2018 = 160000000-19600000 = $    14,04,00,000
3] Interest expense for the second half upto 30th September, 2018 = 140400000*6%*3/6 = $ 42,12,000
Interest payable = 160000000*5%*3/6 = $ 40,00,000
Amortization of discount = 4212000-4000000 = $ 2,12,000
4] Amounts to be shown in the Balance Sheet as of 30.09.2018:
Bonds payable $    16,00,00,000
Less: Discount on bonds payable = 19600000-212000 = $      1,93,88,000
a] Bonds payable [carrying value] $    14,06,12,000
b] Interest payable $ 40,00,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

Find the sample mean Sample 4 8 15 18 15 OA H 12 OB X...

Civil Engineering
1.2K views

Compute the wet area, wet perimeter, hydraulic radius and hydraulic depth for the trapezoidal channel section...

Basic Math
1.2K views

Weekly production schedules are needed for the manufacture of two products X and Y. Each unit...

Physics
1.2K views

1 3 flux flux time time 2 4 10 V 292 wwwww flux flux 302...

Physics
1.2K views

I have written the standard equation of a straight line for this sum upto y...

Algebra
1.2K views

3 Melinda has red blue and black pens 10 of her pens are blue 30...

Accounting
1.2K views

On September 1, ABC Company borrowed $55,000 on a 6%, 9 month note payable to...

Accounting
1.2K views

Benson Manufacturing Company (CMC) was started when it acquired $92,000 by issuing common stock. During...

Accounting
1.2K views

"Exercise 14-7 Oriole Corporation incurred the following transactions. 1. Purchased raw materials on account $54,500...

Accounting
1.2K views

Delta Company produces a single product. The cost of producing and selling a single unit...

Accounting
1.2K views

During the past few years, Joseph Company has taken out the following loans from the...

Accounting
1.2K views

Compare two company that sell merchandise that publicly traded on some type of stock exchange...